Northern Co

question 28

Multiple Choice

Northern Co.purchases an asset for $50,000.This asset qualifies as a five-year recovery asset under MACRS,with the fixed depreciation percentages as follows: year 1 = 20.00%;year 2 = 32.00%;year 3 = 19.20%;year 4 = 11.52%.Northern has a tax rate of 35%.If the asset is sold at the end of four years for $5,000,what is the after-tax cash flow from disposal?

• A)$3,535.36
• B)$3,408.22
• C)$2,592.00
• D)$6274.00

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